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Hi Zane,
I've used On Balance Volume (OBV) and the Negative Volume Index as
surrogates for the closing price with reasonable results. For trading
systems, I agree that pure volume based indicators are a squirrelly
bunch. If I do use them in a system, it is usually with mid-to-long
term moving averages. Even then, I generally use them to confirm a
different indicator's signal.
I would love to use the Cumulative Volume Indicator (CVI) for
individual stocks, but alas, I'm unaware of an EOD data provider that
provides a breakdown of up-volume and down-volume on a per stock
basis. So I try to make due with OBV instead.
If I'm eyeballing things, I'll sometime plot a 30-50% ZigZag on top of
the volume bars to help see key up/down trends. (Standard ZigZag
Disclaimer: don't use it in a system test - the last "leg" of the
indicator is dynamic and can retroactively shift). It's kind of like
have auto-drawn trendlines.
Hope this helps,
Chip
http://coolhistory.com/ChipsCharts
---diamond wrote:
>
> Things are kind of quiet right now, so I'll post a question that has
been
> troubling me. I am a short-term trader (three days to a couple of
weeks). I
> want to use volume to help my trades. I have tired testing Volume
> Oscillators and Volume ROC in my trades, but they both seem to give
me as
> many false signals as good signals.
>
> I am beginning to think that volume may not be such a good indicator
for
> buy and sell signals on short-term trading. A straight Volume
indicator
> seems to be as good as any I have found, and it's not all that good.
I have
> read that some traders don't use volume at all, and that other traders
> don't agree on what volume signifies on the chart.
>
> I was trying to get my volume indicator to tell me two things when I
was
> testing it.
>
> First, when the market is moving sideways, I was trying to separate
the
> real MA uptrend buy signals from the false by looking for increase
volume.
> (Which does not always happen. Sometime volume even goes down, stays
about
> the same, or goes flat, on the start of an uptrend.)
>
> Second, after I am long, and the trend is going up, I want to
separate the
> false tops from the real top. That is, there are always several
adjustments
> on the way to the resistance level top, and I thought volume might
help me
> locate them so I would not sell to fast when the price crossed my
MA. If
> volume would tell me what was going on (or give me some suggestion)
during
> these adjustments, I would know if I should get out then, or wait
and see.
>
> I have pushed price indicators to *my limits.*(Not your limit, buy
mine.) I
> can't seem to get much more out of them no matter what I try. I was
hoping
> to find some way to use volume to give me that extra 3% edge. But,
to me,
> volume is just too weird. Sometimes it acts like it has no
connection with
> price, and other times it is right on the money.
>
> I am looking for a volume indicator that you think works, and under
what
> circumstances. (Remember that I am a short-term trader, and that it
has to
> work with my trading.)
>
> Regards
> Zane Kori
> Abilene, Texas
>
> *
>
>
>
>
>
>
>
>
>
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